Show notes
Jerry Cuomo on everything from blockchain security to hyperledger to the internet of things Hyperledger Foundation IBM blockchain We also reference my interview with Kathryn Haun of the Department of JusticeTranscription
Laura Shin:
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My guest today is Jerry Cuomo, IBMs Vice President of blockchain technologies, IBM is one of the founding partners of the Hyperledger project and it has announced blockchain projects in areas as diverse as private equity, shipping and logistics, pharmaceutical supply chain, food safety, media digital rights management and much more. Welcome, Jerry.
Jerry Cuomo:
Thanks, Laura. Good to be here.
Laura Shin:
You’ve been at IBM your whole career, is that right?
Jerry Cuomo:
That’s correct.
Laura Shin:
So, I want to spend the majority of the interview talking about IBMs blockchain work, but I also want to know your background so, what did you do before you became focused on blockchain?
Jerry Cuomo:
I was the CTO for our middleware group and before that, one of the founding fathers of one of our popular middleware products called WebSphere. So, if you’ve ever like bought something on eBay or you know, at one of your favorite online bank websites, transferred money from one account to another you know, booked a flight, chances are that, that’s running through WebSphere software so you know, certainly was part of the e-business push you know, in the late 90s you know, early mid late 2000s and that set the foundation for my interest in transaction processing you know, I put my kids through school with the mantra of write once, run anywhere, if you remember that Java slogan and also with processing transactions so, when blockchain came around I was like you know, this is it, this is the next big thing.
Laura Shin:
And how did you hear about bitcoin or blockchain?
Jerry Cuomo:
We were doing work around mobile and IBM MobileFirst and we were looking at mobile payments and one of the engineers that was working on mobile payments had this idea around how we can maybe not get directly in the payments…in the middle of the payments process, but maybe we can use like points, loyalty points and we got into gamification for a while looking at levels and rewards and things like that and someone introduced…I knew about bitcoin, but someone introduced the design pattern under bitcoin to me and as a way to explain bitcoin and I couldn’t care less about bitcoin, it was interesting, but it just wasn’t what was capturing my attention, what was, was this design pattern and I asked what it was called and they said it was called blockchain and I said, hmm that’s interesting, going to want to follow up on this, turn the page. A couple months later we had stopped working on mobile payments and gamification and we were working on blockchain so…,
Laura Shin:
And when was this?
Jerry Cuomo:
This was, I would say 2014, 2015 you know, right around that, maybe late 2014 early 2015.
Laura Shin:
And what’s your opinion of bitcoin now? Or just Ethereum or other public blockchains?
Jerry Cuomo:
Well, I have the highest regard in the sense that they help put this approach you know, this approach to you know, I would say blockchain is a team sport, but building an ecosystem, building a business network and allowing transactions to be processed, not by any one specific institution, but by groups and I think…so you know, from that perspective I think there is a level of ingenuity there that is you know, we’re very thankful to have and you know, I do think that it’s the culmination of 20 plus years of computer science, but it did come together quite nicely in that application and then similarly I think everyone who started in that 2014-2015 timeframe, their first love and their first love affair was with Ethereum and we were no different in IBM.
So, we looked at Ethereum as a platform, not just an application where bitcoin was more of a you know, a fixed network, but with Ethereum you can customize and that became very interesting to us and I think from that point you know, we really started kind of an internal group at IBM of blockchain enthusiasts and that’s kind of where it all got started.
Laura Shin:
And so, you just very briefly talked about how you made this transition from this group that was focusing on mobile payments and loyalty points and stuff and how it suddenly transformed into being about blockchain, how did IBM decide to make that major push into blockchain?
Jerry Cuomo:
It didn’t start as a major push I mean, it started as a group of enthusiasts you know, of hobbyists, almost, from different walks of life and you know, IBM is a multinational company so you know, in North Carolina and Almaden and York Town Heights, New York, in different places in Europe, different IBMers were exploring and tinkering with different aspects of blockchain and what started happening was we started discovering each other, that was the first step and there is an executive who runs our research division by the name of Arvind Krishna and Arvind was instrumental in introducing us to each other and getting us focused on a thing versus six individual things.
So, we started as a band of volunteers and we incrementally you know, started organizing ourselves and with Arvind’s executive support and regular interactions, we actually started forming a strategy, right, in 2015 and you know, when we started 2016, we were not quite organized into a blockchain unit, but we were still working from different IBM business units, but we were working completely from the same hymn book we have in 2016.
Had a strategy you know, had a set of goals both you know, working within the community at the time and I’ll talk about the Hyperledger connection here, as well as you know, our platform, which is the IBM blockchain platform and then some of the solutions work that we’ve been doing both organically you know, some of the networks that IBM has co-founders of, some of the custom solutions that we’re building with different institutions out there and then some of the partnerships that we’ve had so you know, it’s from there, 2015-2016, we really started establishing a more organized blockchain team within IBM, again, under Arvind Krishna’s leadership and in 20 yeah, 2017 we’re actually now a business unit so, go figure.
Laura Shin:
And yeah, I’ve met Arvind and he definitely has a passion for this technology and really enjoys talking about it and you know, I’ve also interviewed you before and I know that you are the same so how did you become VP of Blockchain Technologies at IBM?
Jerry Cuomo:
You know, for me it…I guess maybe one other time in my life that I see something that would not only have a profound effect on technology, but also on you know, every day life you know, the first is the internet and e-bit doing business on the internet, but the second is blockchain. So, for me, who was doing the…I was the CTO for the middleware team for about 15 years, I saw this as a great opportunity you know, a great chance to be in at the ground floor to help lead both from an industry perspective and then help IBM to have a seat at that industry table to help define a new market. So, that comes around once in a lifetime and I’ve been lucky now to be twice you know, around e-business and now this so, I jumped in with both feet in that 2015 timeframe.
Laura Shin:
and when you mentioned Hyperledger earlier, I remember that IBM aligned with a Hyperledger pretty early on, why did you guys choose that effort over other private or enterprise blockchain projects.
Jerry Cuomo:
Well you know, at the time, we started talking to users and we realized that the type of blockchain that these users needed didn’t really exist yet and we made some attempts to connect with some of the existing communities out there like the aforementioned Ethereum community and you know, great, great collaborators. At the time, they were busy starting up the Ethereum main net and I think we had a set of pretty deep requirements, requirements that really started to look at privacy and confidentiality in certain ways. Looking at business networks that had to abide to regulations like you know, HIPA and European Union data protection directives so, at the time you know, we did try to work within the context of some of these existing communities, but we decided we had to prove this out a little bit more so you know, inside IBM in this group of volunteers, we decided to start building a blockchain from the ground up you know, a new style of blockchain you know, this is what ultimately became a permission blockchain and as we were just starting to build it we realized we couldn’t, this is not something that any one institution should be building by themselves so, we were doing work around Cloud like with Cloud Foundry you know, OpenStack, microservices and things like that and the Linux Foundation was…it’s always been the go-to place when we wanted to work with other companies, but in a way that was fairly managed and governed.
So, we talked to the Linux Foundation and you know, proposed this idea of a blockchain for business and basically what Jim Zemlin from the Linux Foundation said, said that’s a great idea, IBM, see in the corner there, those eight other companies in a line, they’re lining up to do something similar so, why don’t you join forces with them and you know, at that point we started collaborating with the various players like Digital Assets Holding, Intel and many of the early founders of the Hyperledger project and starting aligning our vision for this blockchain for business and figuring that if we were going to build serious software, that was going to be taken seriously by major institutions and major governments around the world that you know, doing it in a way that no one of us could run the table you know, no one of us could set the rules and policies and to do it under the blueprint of the Linux Foundation was the way to go and we did and you know, I think depending on how you measure this, it was either late 2015, early 2016, I think we announced the intention in late 2015 and actually established in February of 2016, the Hyperledger project.
Laura Shin:
And are all the blockchains that IBM uses in its various projects, are they all done with Hyperledger technology?
Jerry Cuomo:
Yes. Yes, and it’s important because it’s important to know the lineage of the technology that you’re working on and that the technology you know, again, a lot of the user base, big or small you know, it’s not necessarily size of the business, but you know, Everledger currently has over a million diamonds, certificates and digital fingerprints on a blockchain and that’s you know, that’s quite a significant set of assets, right?
So, we want to make sure that the assets that are managed on the ledger, the ledger has integrity and that the code base in which that integrity comes from is known I mean, it’s built from and I tell you, there are you know, if you think about Hyperledger similar to Apache you know Apache is an umbrella project and there’s several projects being managed at once under the Apache banner, that’s the same thing for Hyperledger, there’s a number of projects and you know, within those projects, there is a common way of thinking about licensing, how that software is licensed and shared. The maturity model of starting out as incubator you know, growing to you know, a mature offering, interoperability between the projects.
So, the Linux Foundation you know, like Apache, what they’ve done for like webserver technology in the Hyperledger has stepped up to be that umbrella so, we are enthusiastic about several of the projects at IBM where devote contributors to the Hyperledger Fabric, which is a core foundational technology you know, with implementing the shared ledger and consensus and permissioning system and also a project, a new project, that has recently been proposed called Hyperledger Composer, which is a higher level framework for building blockchain application. So, we are you know, devote contributors to those, too, and first and foremost members of that community where there’s at least five or six other important technologies, too.
Laura Shin:
Okay. So, it sounds like you don’t necessarily really like control the protocol, obviously, because there are these other entities that are also working on it, but because you do have ________00:15:16.8 that you’ve devoted you know, it seems like you’re very deep in. Where does that boundary between IBM versus Hyperledger lay, how would you characterize the relationship?
Jerry Cuomo:
I mean, we’re a premier partner, right, so we have a seat at the board. In fact, I occupy that seat representing IBM to the board, Blythe Masters is the chairman right now and we also have Chris Ferris, who is the elected leader for the technical committee for Hyperledger, managing all of the technologies under that.
Laura Shin:
And he is…who is he?
Jerry Cuomo:
Chris Ferris is a distinguished engineer at IBM, so we have two IBMers on the board so to speak. Myself as a premier member as well as Chris who is voted in because of you know, as the technical committee lead and that vote happens yearly, I believe, so Chris I think, was…he’s on his second term now, he was voted in again this year and I think Blythe Masters was also voted in as her second term so we like the leaders we have right now.
So, that’s one connection that we have, but we have another connection where we have some 70 engineers whose day job it is to contribute to software in the Hyperledger project and you know, these engineers are working across at least two projects, which is the Hyperledger Fabric project and the Hyperledger Composer project. Chris is consulting across all of the projects, Iroha, Explorer, Sawtooth, these are all other projects working under the Hyperledger banner. So, you know, we have our eye on all of them and we are, as I said, devout contributors to a couple.
Laura Shin.
Great. Let’s talk about one of the big blockchain projects that you guys are doing, the food supply chain project with Walmart, it must be quite an undertaking to get the world’s largest retailer to agree to try something new. How did you sell Walmart on applying blockchain technology to the food supply chain?
Jerry Cuomo:
So, I think first and foremost when you look at you know, while blockchain, I think, applies to all industries and we’ve seen like, last year, especially early last year, the financial services group were the loudest, but there was many other industries out there looking at blockchain, looking at applications and use cases, but I think financial services was getting all the credit as some of the louder proponents of the use of blockchain.
As the year unfolded, we started seeing a set of patterns, templates you know, things that regardless of whatever industry you’re in there, was a set of companies using…looking to use blockchains for a certain purpose and visibility and provenance is a generic usage that blockchain could play a big role in. So, you know, I have multiple companies working so, I might have an importer, exporter and shipping company and those three companies are involved in some kind of multi-party collaboration or transaction i.e., the importer is expecting something from an exporter that is coming through a shipping company.
So, getting visibility where any of our internal systems or record may not have the whole truth of that transaction, we’ll just have our part of the truth, there is no you know, kind of bigger picture of the truth that is across the importer, exporter and shipper, right? So, visibility ledgers are you know, that use of blockchain is a big deal and that’s a provenance, which is who owned this thing and where did it…what happened to it along the way, how is ownership transferred and you know, that is a basic usage of blockchain across multiple industries you know, so one side you can use that very same pattern for tracking in a healthcare scenario you know, the validity of drugs you know, as they’re manufactured and shipped or you know, mangos and avocados and food quality.
So, there’s a basic design pattern or you know, in a financial services supply chain, watching you know, how loans and channel financing is done for parts and suppliers, right, so I think you know, there’s this basic pattern that we see and Walmart, like many global companies that manage complex supply chains latched right onto this view, right, which is blockchain could really be used, give visibility where visibility doesn’t exist across multiple parties that interact across their various supply chains that they’re involved with. So, again, we see this pattern across multiple industries, we’re fortunate to have partners like Walmart who are collaborating with us to actually stand up a network to use this pattern to actually, not only do something good for business, but also do something good for society because I think food qualities like this are not only going to reduce waste and there’s a lot waste in food supply chain, but also looking at salmonella outbreaks and you know, not shutting down all of the pork coming out of a region, but being able to trace it to the farm and say, okay this farm is quarantined, but the region is okay, we can continue pork you know, production across that and that’s an important thing to be able to pinpoint at that level and with this ledger you know, with this food quality ledger you know, this is increasingly becoming a reality and we’ve had our first asset transfers as we watched food tracked in two different regions of the world using our IBM blockchain platform that’s powered by the Hyperledger Fabric.
Laura Shin:
And what are those regions and what food is being tracked?
Jerry Cuomo:
That’s you know, I mentioned the two are, one is pork and I’m going to get this…I have to go back and look at the reference, but I think getting one is pork and I think it was in China and that was…we did a series of tests and Laura, one of the things you know, in blockchain like any production…like any system, there are phases, right, and I think there’s a crawl, walk and run phase.
None of these networks are at the run phase, yet, but several of them are walking and we progress up and I think we’ve been, in the case of the food quality project, with Walmart and some of the work that we’ve done you know, with our teams in China is to shoot a tracer through the system, right, so let’s go end to end, get multiple institutions involved using the same ledger and run a couple through if you know what I mean, right, so let’s look at shipment going from an exporter you know, to a regional supplier to border patrol, etc., etc., and take it through and look at the transaction going through the ledger to make sure the system is working as expected, right?
So, that’s usually the crawl phase and then you know, the walk phase is to get more and more institutions gaining visibility on that ledger, right, so including more of you know, that ecosystem, members of the ecosystem so, maybe a food processing company, maybe a retail company, etc. and start building out the members of that ecosystem that are now leveraging the ledger, if that makes sense?
Laura Shin:
Yeah. And I’m assuming for the run phase, you have kind of like some target goals in mind. How many transactions might a blockchain like that process per day?
Jerry Cuomo:
You know, probably not as many as you think you know, one of the things about blockchain is that blockchain is less used in these cases as a database you know, for the data itself, but more as an event tracking system, right, evidence that things have happened versus the things themselves so you know, obviously you know, we’re not putting pork on the blockchain, grinding it down and molecularly putting it on, but we’re doing this like we’re recording evidence of the packages and in some cases, RFID tags that the shipments are contained in and things of that nature.
So, in each institution that passes probably has about four or five events that they instrument their existing IT systems to implement and push over into the ledger, right? So, again, each institution still has their existing IT systems, but they’re adding a couple more bits of information and pushing it over to the ledger and this is allowing, again, this bigger system of truth to establish, if that makes sense?
Laura Shin:
And are there Internet of Things devices that are used to make this happen like when a shipment arrives in a particular port, is there some kind of device that triggers a new entry on the blockchain?
Jerry Cuomo:
I think in the run phase, we would like it to be completely automated and right down to like the RFID, I’m sorry the IoT devices you know, they’re registered and trusted you know, so they have certificates associated with them and we’d only trust information coming from certain, I’d say, permissioned devices and I think that’s the end state, we actually want to get there. In the state we’re in right now, which is somewhere between you know, kind of entering into the walk phase and starting one or two experiments around run, some of this is just being manually added you know, I’m saying manually, we’re doing everything…one of the terms, Laura, that we’ve brought up is this notion of a Shadow Ledger, which is we’re not changing the existing business processes, but we’re enhancing them, so the ledger isn’t the system of record, but it’s an enrichment to the system of record, so in these phases we will do things you know, I’d say lighter integration like you know, log scraping and maybe in a proxy server you know, sending an additional message out and things of that nature, right, so I think right now the phase we’re in, we’re not quite fully automated IoT, but we’re starting to see how that can come into play and how we can automate.
Laura Shin:
And the Shadow Ledger is sort of a way of just getting kind of like the system up and running to see how this would work, but before you fully transfer all of that information onto a blockchain and then once the Shadow Ledger kind of works fairly well then you can start thinking about transferring everything over, is that the purpose of that?
Jerry Cuomo:
That’s right. Exactly right. You know, if the Shadow Ledger stops working you know, you can still ship…make shipments, it doesn’t bring down the whole ecosystem, the ecosystem still works, but the Shadow Ledger is there to shadow you know, follow or enrich the main business process and add value like and in this case, the value is visibility across multiple groups, right, and that I think as we build up that you know, as we build up that, over time that becomes, that will become you know, the system of record, right, but it’s you know, we don’t need to rip and replace all the existing systems before we start bringing value into that ecosystem I guess is the point.
Laura Shin:
Okay and one last question, which is sort of just a question about how some of these B2B business models work. Once you develop this system and this technology, can you then also go and sell this system to Walmart’s competitors like, could you say to Aldi or you know, some other grocer, hey we have this great you know, food shipment tracking method, is that something that you’re free to do?
Jerry Cuomo:
Yeah. That’s a good question. One of the things I believe is there will not be one blockchain to rule them all I mean, I think like today, these shared ledgers will pop up within, in and around existing business ecosystems. I think that’s the most natural you know, the natural pull will be towards you know, enriching the way businesses currently interact today. I think over time, what’s going to happen is adjacent business…adjacent blockchains will start to merge or at a minimum, interoperate with each other, right, and then you kind of have a web effect going on, right, where you’ll be able to interlink ledger system A and ledger system B together and a transaction could actually flow from one tech to another.
So, you can query, you can get permission to query from one ledger to the other then I see probably you know, maybe a Walmart ecosystem merging with another ecosystem because when you think about it, a lot of the suppliers are also members of those other ecosystems, too, right, but I think you know, I think that’s an advanced run, maybe that’s when we get to the sprint phase, we start looking at how these ecosystems start to play together and you know, but really when we get to that point and that’s certainly a social point of how these ecosystems work together, but also it’s a technological point you know, how do we integrate these blockchains and I think there’s two points.
Clearly the Hyperledger Fabric as a core foundational technology has capabilities that will allow multiple ecosystems to collaborate, so that’s one thought, but I also think that not every blockchain, although I’d love to see you know, convergence around Hyperledger Fabric technology, I think the reality is there’s going to be multiple technologies out there. So, there’re still be a need for blockchains to interoperate with one other and I think you know, as we get to these permission blockchains you know, perhaps in 2018, the end of next year, that will start to become an interesting topic of discussion, how do these blockchains interact, but we need permission blockchains first to exist before you know, we have to worry about how they’re going to interoperate.
Laura Shin:
Yes. Yes. I do hear some people talking about the interoperability and how that might work, but you’re right, it’s far off. Okay. Let’s take a pause right here for an important word from our sponsor, OnRamp. The best companies in the world obsess about branding, killer branding will transcend your company and strategically and competitively position you in the market. Done well, a remarkable brand will affect buyers and their purchase decisions and give your organization a voice that sets you up for long term success. OnRamp is a full-service creative agency that helps its clients maximize brand awareness, gain market momentum and accelerate growth, whether it’s branding and identity for a new start-up, redesigning an existing website to generate traffic and leads or executing a custom design project or marketing strategy, OnRamp will get your organization strategically poised for the future. You can learn more and see examples of its work at thinkonramp.com.
I’m speaking with Jerry Cuomo, Vice President of Blockchain Technologies at IBM. Let’s talk about a project that’s somewhat at the other end of the spectrum from the Walmart one, this is a private equity project with a less well-known company, Northern Trust. Who is Northern Trust and what does this blockchain do?
Jerry Cuomo:
So, one of the things that Northern Trust is looking at doing is, remove friction from the process of private equity management and private equity administration. So, you’ve heard of private equity funds and Northern Trust is one the world’s largest private equity fund management companies out there you know, like any regulated activity around financial services you know, private equity to produce and create a fund to manage the fund, there are many players involved and you know, across the players, one of the players, there is regulatory involvement and rules that need to be followed and Northern Trust had this idea of building a private equity management ecosystem around a shared ledger where as a fund is being created, as a fund is being managed you know, in it’s various states, getting that collaboration to occur on a shared ledger…
Laura Shin:
And can you describe for me like the life cycle of a private equity deal and how…what are all the different transactions that can happen and then how the blockchain would manage those?
Jerry Cuomo:
Not very well. I know more about food quality and private equity than I ever did before, but I’m far from an expert. I do know a number of things like from an overall design pattern is that you know, there are multiple institutions involved and multiple countries and there are documents that are exchanged amongst these institutions. The documents have to be validated and consented on that the documents were validated on this time and date and there needs to be audit trails of those activities happening, you can’t go back, it would be a really a bad thing to go back and alter any of those agreements that are embodied in those documents and then as this is all happening, a regulatory commission needs to sign off and actually see, have visibility as an auditor to these activities as they are happening, right, so there’s multiple players exchanging information and doing it under a regulatory guidance, so I think at least from where we came in this from IBM was you know, helping Northern Trust and the key members of their ecosystem to kind of come to a level playing field very quickly meaning building out this environment on a shared ledger required each of the members to process documents a certain way, push those documents out to a new environment, which is the shared ledger environment.
So, if we all had to do this al a carte you know, I like to talk about blockchain being a team sport like if each institution had to do this as a one off, that would take a lot of time, so what IBM did is we helped them kind of raise the tide for all of the members of the ecosystem equally so, helping build a smart contracts, deploy those smart contracts to all the players through what we call a high security business network, right, so one of the core underpinnings of IBM blockchain is this thing we call the high security business network. So, Northern Trust and the members of the Northern Trust ecosystem all leverage this to quickly get at the blockchain software and the various portals that we had to construct so that they can you know, push documents and sign documents and get them out onto the ledger, so that’s what we did in IBM and there are people in IBM that understand private equity, I’m not one of them, sorry.
Laura Shin:
Well, that’s fine. I actually wanted to ask you about security, though. How do you manage security in a private blockchain? Like, how many nodes would you need to feel that a blockchain was secure? As you know, bitcoin and other public blockchains use many nodes because I mean, simply, really anybody can join so, what metrics…do you also use number of nodes or computing power as a way to measure security or do you have different metrics?
Jerry Cuomo:
No. we have different metrics you know, so as I said this is permission blockchain and we do run consensus, there is a consensus algorithm and there are maintainers of the integrity of the ledger, right, that run their own copy of the blockchain software. So, the minimum number is around five nodes and there’s statistic importance to that you know, you have to be able to reach consensus so you know, reaching consensus with two nodes is pretty difficult, three nodes it’s possible, but if one node happens to be down for a reason then you’re back to two, right, so you want to make it big enough so that you can reach consensus, so you can reach a majority so, the magic minimum number is usually around that number you know, five or six.
Laura Shin:
but then what’s the ideal number I mean, I can’t imagine five is the ideal, that’s the bare minimum. What’s an ideal number?
Jerry Cuomo:
That’s the bare minimum and the ideal number is a function of what the business network does and what is the trust you know, what is the foundation of trust for that network? You know, I’ve said this several other times you know, to convict a felon, the justice system says you need a jury of 12, right, so that is the right number, that was derived as the right number within that ecosystem at that problem, right, and you know, you look at other trust relationships like some of the work that we’re doing around trusted identity in Canada with SecureKey, the trust system, especially in Canada you know, the regional banks, the six main banks of Canada are viewed as a foundation of trusts.
So, if all six banks are concentrating or are part of the consenting algorithm, it’s interesting to see how other institutions in that ecosystem will delegate their trust to the six, right, and we see this depending on the ecosystem there is a hierarchy of trust, right? So, there’s usually a judge, which is one or more groups that set the rules then there’s the jury, which is the group that maintain the rules and apply the rules, right, which is usually the number and then their participants and there can be many more participants, but the participants delegate their trust you know, to the jury who delegates their trust to the judge, right?
So, there’s a hierarchy in a permission blockchain and it works out really well, but you don’t need everyone in the network to be running blockchain software, many people in a network may need access to it and its permissioned access, you need keys to be able to sign a transaction to do a query, but not everyone needs to be weighing in on the consensus and that’s a function of what the network is doing, right, so an important part of the founder, I call them the judges, right, or the founder in this example is to set the rules, what is the rule of that blockchain and we talk about public or private, I’m not sure that either of those are right, it’s just that you know, in a permission blockchain you know, you can apply these thoughts, right? In a permission blockchain you can set up this hierarchy of trust and I think this hierarchy of trust matches much closer to the way we see institutions running today.
I mentioned convicting a felon you know, we can’t get on a plane unless we have a government issued ID card, whether it’s a driver’s license or a passport, so we trust the DMZ, we trust the homeland security group, so there is a delegation of trust for any ecosystem and I think what we’re seeing is these early adopters of blockchain for permission blockchains are emulating that, right, and actually you know, some people come back and say, well then is it really a blockchain and the answer is, heck yeah you know, all of the benefits that you get from decentralization from having that immutable ledger, the audit trail, the visibility is all there, right, the smart contract pieces, they’re all there so you know, I think it’s a way as I said, it is a new style blockchain, it is a new style blockchain that I think more closely emulates the way society operates today.
Laura Shin:
You’ve raised a couple of times this issue of trust and also in different ways you’ve referenced identity and I know that this is going to be a lynch pin in this whole future of blockchains and this is also an area that you guys are working in. Tell us exactly what you’re doing and who your partners are.
Jerry Cuomo:
So, I think there’s probably two dimensions you know, that when you talk about identity and blockchain, there’s two dimensions to it you know, two sides to the coin. There’s identity within the blockchain ecosystem, right, and that’s the relationship that I just talked about, the trust relationship from the founders to the maintainers of the integrity of the ledger, to the participants in that network. I think these are all you know, form the core relationships of you know, institutions participating within the shared ledger.
So, I think that’s, from that perspective, there is the digital identity of the institutions that comprise the blockchain ecosystems that we’ve been talking about whether it’s private equity or you know, Walmart food quality, etc., but then there is, could we use a blockchain for reimaging a consumer identity system, right, for larger populations you know, users like you and I, where today, to get on an airplane we need to hold a plastic driver’s license along with our phone that has a digital boarding pass. Why can’t we both have…why can’t we have a digital boarding pass and a digital proof of our identity being all on our phone, right, and I think a blockchain becomes a very interesting way to meet some of the most stringent requirements that privacy institutions are really pushing. Things like you know, self-sovereign, that the end user has to be in control of where and who and when their digital identity is utilized.
Laura Shin:
Is that how your digital identity work, is that the goal here? For it to be self-sovereign? I know you guys are doing some work with different banks in Canada around that, but I’m not sure exactly how it’s structured.
Jerry Cuomo:
Yeah. SecureKey is a business partner and we made a recent announcement that we’re working together. They’re well under way of building an identity verification system on IBM blockchain, leveraging the Hyperledger Fabric and that is a self-sovereign identity system that they’re building, i.e. the user’s in control of their identity attributes, but it’s managed across an ecosystem, an identity ecosystem of institutions and these are the pillars of society like banks, like telcos, like you know, provenances, etc.
So, it’s a, I think, a very clever system that is well recognized by you know, identity aficionados you know, like NIST, the National Institute for Standards and Technology, who’ve put out identity frameworks you know, best practices for how to deal with consumer identity you know, as I said things like you shouldn’t be able to do analytics you know, kind of on identity, shouldn’t be able to trace identity, you shouldn’t have honey pots, intermediaries that are collecting honey pots of identity, you should only ask the minimal amount of questions like you know, when you show up at a bar, to prove your age, the age proof is…you’re sharing an identity document that also has your address and that you’re a you know, that you’re an organ donor, that’s extra questions that weren’t…you didn’t need to provide that information, you just need to say, are you over 21 or not, right?
So, identity…there are these you know, fine institutions around the world that are making really important observations and putting important frameworks in place around how to manage digital identity and institutions like SecureKey are finding a way…have found a way to use a blockchain to implement those, right, and then the system that they’re building in Canada is one such example.
Laura Shin:
Yeah. There is a lot of really great ways that blockchains can solve some problems that occur around identity such as fraud, which another guest I’ve had on the podcast, Kathryn Hahn, who is with the Department of Justice. She talked at length about that in her podcast so I will reference that in our show notes. Another project I wanted to ask you about is one that I’m actually personally interested in because it concerns digital rights management for creators, in this case you guys are working with musicians and I’m interested in it because my copyright is actually stolen very often, so can you tell us briefly what it is that IBM is doing in this area and how this technology will work?
Jerry Cuomo:
On the digital rights management?
Laura Shin:
Yes.
Jerry Cuomo:
Yeah. So, again, digital rights management is perfect for this application and you know, there are a number of partners that have come to IBM looking at using digital or distributive ledger technology for again, very much similar to our conversation around identity, which is managing rights with full visibility, traceability, provenance and all that. Remember I said earlier, Laura, there is a pattern here and whether it’s digital rights or pork in China or you know, healthcare records, this notion of going from the originator and having that original stamp, right? So, whether it’s the original copyright, whether it’s a digital sampling and a signature from a piece of music or art or a picture of…or a high res picture of a diamond, right, it starts with a provenance, the origin and be able to put that origin mark.
Laura Shin:
And so, does this work kind of like as a smart contract that’s imbedded in an mp3 file or something? Is that how it is structured?
Jerry Cuomo:
So, I mean, for digital rights management I have yet to see you know, like we talked about some of the crawl, walk, run phases of some of the other projects. I haven’t seen any of the digital rights actually make it to the walk phase yet, so to say how is it done, is it done with smart contracts and mp3s are not clear yet, but smart contracts do play an important role here. On any kind of you know, when you get into self-sovereign management, the ability to set a contract that says you know, here’s a key to this and you have the key, this key is valid you know, for the duration of this contract, right, and after that you know, so whether it’s you know, renting a piece of music or a podcast or it’s, I’m going into a hospital and I want to allow that hospital to write to my healthcare records you know, contribute to my healthcare record collection.
I mean, I think managing utilization and ownership in a read/write access via smart contracts is a very powerful thing and you know, the nice part about blockchain and how, for example, Hyperledger Fabric manages data and logic, it manages them all on you know, the ledger, right, so the contract is the data, the data is also the contract so these things are managed on the ledger in the same immutable you know, fashion as the data is so, that gives the tools and the capability, puts it in the hands of those groups that are looking at how to reimagine digital rights management on the blockchain, that’s a very powerful set of tools and it’s the same tools that, again, I think a lot of the folks that we’ve been talking about in this podcast are using across different industries, but it’s a similar pattern and it is the same exact tools.
You know, I said that looking now across you know, the last year of users and founders building solutions on blockchain, I see you know, from a Hyperledger Fabric perspective 100 percent of the users across all these various use cases and industries, 100 percent of the users utilize about 90 percent of the technology, which means that you know, Hyperledger Fabric and the tool set that it brings around it is quite applicable to all industries and you know, these design patterns that we talked about, visibility, provenance, etc. you know, are the same or similar across all of these and then you know, the 10 percent difference Hyperledger Fabric provide is modular, right, so you can create and plug in new modules to customize it, so I think between that and the smart contracts, you can really start to tailor for various use cases like the ones we’ve talked about here.
Laura Shin:
Well, IBM has its hands in so many of the different cutting edge blockchain projects that are out there, there isn’t time to cover them all. Another one I wanted to ask about was the work you’re doing with Maersk, but in interest of time I actually want to use the last remaining minutes to ask you about some criticism that I’ve heard. IBM has at least 400 clients, according to you in ________00:51:20.3 article that I read, who are testing out blockchain technology and 615 employees working on blockchain, so what do you say to some people who have expressed potential worries that if a big public company like IBM is creating blockchain solutions that, that sets up IBM to potentially lock its customers into their version of the software?
Jerry Cuomo:
Yeah. I mean, I saw a potential, we’ve heard it before and I think it’s probably not…ultimately it’s obviously not something that we’re intending to do, that’s not our intention, in fact you know, the whole opening conversation around building within the community process of the Hyperledger project is a key way we go forward and you know, building out around that open source set of projects is where it all starts and of course from that perspective, we’re going to try to provide some of the best production environments around that and you know, we’re hoping some of the newer members of the Hyperledger project like SAP you know, Red Hat, Cisco, have been in there you know, we’re hoping some of our peers in Hyperledger will be as eager as we are and I think until we start to see some of the others pick up their press releases and pick up their commercial plans around blockchain, it’s going to be looking like IBM is out standing in the field by ourselves and all of those proprietary comments will come up.
Laura Shin:
Yeah. it is true, it is a little bit early and I do know that there are other efforts like the Enterprise Ethereum Alliance, which just announced and so is potentially a competitor, but also relatively new. Well, thank you so much for coming on the show, where can people learn more about your work and get in touch with you?
Jerry Cuomo:
I think the two places, obviously, hyperledger.org, please join the community. We as the Hyperledger community welcome everyone, both technology companies, users from all industries, etc., so that’s place number one to go. I think place number two to go is ibm.com/blockchain and you can read about all of the things we talked about off of there and Laura, thank you very much for your great questions, as well. So, go to your podcast, too.
Laura Shin:
Great. Yeah. Thanks so much for coming on the show.
Jerry Cuomo:
Very welcome.
Laura Shin:
Well, thanks everyone for joining us today. Before you switch off this podcast, don’t forget, go to surveymonkey.com/r/unchained, let me know who you are and what you want to see on the show. If you’re interested in learning more about Jerry, check out the show notes, which are available on my Forbes page, forbes.com/sites/laurashin. Thanks so much for tuning in to Unchained, which comes out every other Tuesday, please share the podcast with friends and on social media and remember to review, rate and subscribe to it in the iTunes or your preferred platform. Thanks again for listening.
